Trading In a Used Car

You love your old car. Or maybe you hate it. Or maybe you love to hate it. But no matter how you feel about it, its time has come. It's time to purchase a new vehicle, and you're thinking about the trade-in value you could get from your used car. But before you send your used car off to the farm, there are some aspects of your car trade-in to consider.

What Is a Car Trade-In?

A car trade-in is a common transaction at new and used car lots. Most of the time, an owner will swap their old car in exchange for credit toward buying a new car from the dealer.

But just because you're trading in your old car doesn't mean you can stop paying for it. If you're still making loan payments toward your old car at the time of the car trade-in, you'll still be held responsible for the balance of that loan. However, it may be possible to cover that debt in the trade-in process.

How to Trade In Your Car

As with most things, knowledge is power when it comes to car trade-ins. Before making the transaction, it will be good to review not only what the used car value is to you, but also what it is to the dealer.

Determining Your Car Trade-In Value

There are several tools available for figuring out a fair trade-in price for your vehicle. The Kelley Blue Book (KBB) and the National Automobile Dealers Association (NADA) offer free online sources for determining the general trade-in value of your car.

Other factors will help you come up with a more accurate quote for your specific vehicle, including its:

  • General condition.
    • Paint chips.
    • Dents or dings.
    • Pet or cigarette odors.
  • Accident history.
  • Timing and location.
    • Selling a convertible in the winter might be difficult.
    • Selling a convertible in Alaska might be even more difficult.

Get a Better Deal from the Dealer

To get the best idea of your individual car's trade-in value, take it to a few local dealers (perhaps 3 or 4) that sell similar vehicles. Don't sell yourself short by settling for the first offer you get.

You can make your car more attractive for a trade-in to a dealer in several ways:

  • Make sure the outside is washed and the inside is clean.
  • Bring any records of maintenance on your car.
  • Let them know you have an idea of your car's trade-in value.

These factors can not only enhance your car's curb appeal, but also strengthen your negotiating position with the dealer.

How Dealers Determine Used Car Values

A dealer's mindset is likely much different than a seller's when it comes to used car trade-ins. A top priority for a dealer is how quickly they will be able to make their money back on the investment by reselling the car.

It also means most dealers will offer a price lower than many sellers' expectations, in order to turn a profit on the trade-in. Don't fall victim to “reverse sticker shock" by being overly sentimental about your old car.

On the flip side, if you are offered a higher trade-in price, it may mean that the dealer will try to sell you the new car at an inflated rate. Be wary of the price being offered for both vehicles. Learn what to pay for a new car here.

Dealers may also use slightly different sources for determining general trade-in values, such as the wholesale vehicle auction operator Manheim or the Black Book guide to used car prices.

What Matters to a Dealer

There are several other factors that most dealers will take into account when analyzing your trade-in, such as:

  • Their current inventory.
  • The car's model age.
    • A newer trade-in may fetch less money, as it could be competing against more new cars.
  • Your vehicle's engine type.

Getting the Best Trade-In Value

Once you have all the information, you can start negotiating. Again, it's recommended to take your car to several local dealers before making this step.

If you have similar offers from several dealers, take your trade-in to the one where you want to buy your new car.

If none of your offers seem good, you can either:

The Pros & Cons of Trade-Ins

Of course, a trade-in may not be the best option for you. There are several aspects of the process that might appeal to one person but not another. Consider all of the pros and cons before making the decision to make a used car trade-in.


Despite performing the advised research before making a trade-in, the process is typically faster and easier than selling a car on your own.

Things you WON'T have to worry about when making a trade-in:

  • Taking out a for-sale ad for your used car.
  • Meeting and feeling out potential buyers.
  • Worrying whether a potential buyer will pay for the car.

The money you make can be put toward the new car you intend on buying. If you're still paying off a loan for your old car, and the remaining amount on the loan is less than what your old car is worth, it is possible to settle that debt with money from its trade-in value.


Generally, you'll be able to get more money for your car by selling it yourself. A great and easy way to do that is by using the Internet. Check out our guide to selling your car online for more details.

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